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Call Options Plays
Put Options Plays
Strangle Options Plays
ATI BHI None
LRCX LZ  
SHLD PCU  

New Calls

Allegheny Tech - ATI - cls: 102.41 change: -3.17 stop: 98.49

Company Description:
Allegheny Technologies Incorporated is one of the largest and most diversified specialty metals producers in the world with revenues of $5.3 billion during the most recent four quarters ending March 31, 2007. ATI has approximately 9,500 full-time employees world-wide who use innovative technologies to offer growing global markets a wide range of specialty metals solutions. (source: company press release or website)

Why We Like It:
We are expecting the markets to continue lower on Monday morning. That should pull ATI right toward support near $100 and its rising 200-dma, which is where the stock should bounce. While many of the technical indicators have turned bearish we're still willing to bet on an oversold bounce. We're suggesting readers use a dip into the $100.50-100.00 range as a new entry point to buy calls. We'll place the stop under the June low. If triggered our target is the $107.50-110.00 range.

Suggested Options:
We are suggesting the September calls. Our trigger to buy calls is at $100.50.

BUY CALL SEP 100 ATI-IT open interest=134 current ask $8.80
BUY CALL SEP 105 ATI-IA open interest=198 current ask $6.40

Picked on July xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/25/07 (unconfirmed)
Average Daily Volume = 2.0 million

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Lam Research - LRCX - cls: 56.87 chg: -0.16 stop: 54.45

Company Description:
Lam Research Corporation is a major provider of wafer fabrication equipment and services to the world's semiconductor industry. (source: company press release or website)

Why We Like It:
LRCX broke out higher past significant resistance in mid July. The stock has since consolidated sideways in the $56-60 range and held up relatively well considering the sharp sell-off in semiconductors this past week. The stock does look poised to move lower and we expect markets to be weak on Monday. A dip into the $56-55 region would look like a new bullish entry point. We're suggesting readers use $56.10-55.00 as an entry zone to buy calls. We will set our initial stop loss at $54.45. We'll have two targets. Our conservative target is the $59.75-60.00 range. Our aggressive target is the $63.75-65.00 range. The P&F chart points to a $81 target.

Suggested Options:
We are suggesting the September calls but we plan to exit ahead of the late August earnings report.

BUY CALL SEP 55.00 LMQ-IK open interest=2070 current ask $4.80
BUY CALL SEP 60.00 LMQ-IL open interest=1962 current ask $2.40

Picked on July xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 08/24/07 (confirmed)
Average Daily Volume = 2.9 million

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Sears Holding - SHLD - cls: 136.20 chg: -5.84 stop: 127.49

Company Description:
Sears Holdings Corporation, the publicly traded parent of Kmart and Sears, Roebuck and Co., is the nation's fourth largest broadline retailer with over $50 billion in annual revenues and approximately 3,800 full-line and specialty retail stores in the United States and Canada. (source: company press release or website)

Why We Like It:
SHLD has just been crushed in the last three months with a plunge from $190 to $136. The stock has dropped 38 points in just the last three weeks. Needless to say SHLD is very short-term oversold and way overdue for a bounce. We expect stocks to continue lower on Monday morning but eventually the market should see a rebound after last week's carnage. SHLD has some support near $135 but it has stronger support near $130. We are suggesting that readers buy calls on a dip into the $133.00-130.00 zone, which is where we expect it will bounce. If triggered we'll target a rebound into the $139.50-140.00 range. More aggressive traders could aim higher. Bear in mind that we don't want to hold over the mid August earnings report.

Suggested Options:
We are suggesting the September calls. Our entry zone is the $133-130 range.

BUY CALL SEP 130 KTQ-IY open interest=305 current ask $11.80
BUY CALL SEP 135 KTQ-IX open interest=234 current ask $ 8.70
BUY CALL SEP 140 KTQ-IW open interest=383 current ask $ 6.30

Picked on July xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 08/16/07 (unconfirmed)
Average Daily Volume = 1.7 million
 

New Puts

Baker Hughes - BHI - cls: 79.43 change: -1.83 stop: 84.15

Company Description:
Baker Hughes is a leading provider of drilling, formation evaluation, completion and production products and services to the worldwide oil and gas industry. (source: company press release or website)

Why We Like It:
BHI reported earnings on Friday morning. The results beat estimates by a penny and revenues came in better than expected. Yet the stock sold off anyway. Energy and oil stocks were unable to mount a rally even though crude oil rallied toward record highs. BHI has been acting bearish for days. The stock produced a bearish double-top pattern back in June and early July under resistance at $90.00. This actually turned out to be the second half of a much larger bearish double-top pattern (see weekly chart). The oversold bounce from July 18th struggled several times near $84 and eventually rolled over. Friday's breakdown under $80.00 looks like a new entry point for puts. Our target is the $75.25-74.00 range. The 200-dma near $74 is probably support.

Suggested Options:
We are suggesting the October puts although Septembers would work well.

BUY PUT OCT 85.00 BHI-VQ open interest=1460 current ask $8.20
BUY PUT OCT 80.00 BHI-VP open interest=5478 current ask $5.10
BUY PUT OCT 75.00 BHI-VO open interest=2244 current ask $2.95

Picked on July 29 at $ 79.43
Change since picked: + 0.00
Earnings Date 07/27/07 (unconfirmed)
Average Daily Volume = 4.6 million

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Lubrizol - LZ - cls: 61.62 change: -2.71 stop: 65.26

Company Description:
With headquarters in Wickliffe, Ohio, The Lubrizol Corporation owns and operates manufacturing facilities in 20 countries, as well as sales and technical offices around the world. Founded in 1928, Lubrizol has approximately 6,800 employees worldwide. Revenues for 2006 were $4.0 billion. (source: company press release or website)

Why We Like It:
Friday morning LZ reported what appeared to be pretty good numbers for its earnings report but investors sold the news anyway. The stock has already been trending down and has broken support near $65.00 and its 50-dma. We believe there is more profit taking ahead. We're suggesting puts and our target is the $57.00-55.00 range. $57.00 is near the top of the April gap and $55.00 is near technical support at its 200-dma. FYI: The $66.03 intraday high on Friday looks like a bad tick.

Suggested Options:
We are suggesting the September puts.

BUY PUT SEP 65.00 LZ-UM open interest=153 current ask $4.60
BUY PUT SEP 60.00 LZ-UL open interest= 57 current ask $1.60

Picked on July 29 at $ 61.62
Change since picked: + 0.00
Earnings Date 07/27/07 (confirmed)
Average Daily Volume = 563 thousand

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Southern Copper - PCU - cls: 109.04 chg: -3.35 stop: 113.55

Company Description:
Our mining operations are located in Peru and Mexico. We own and operate four open pit mines and three metallurgical complexes that make SCC a fully integrated copper producer with significant byproducts of molybdenum, zinc and precious metals. (source: company press release or website)

Why We Like It:
PCU reported earnings on Thursday night and the results were impressive but investors decided to take some money off the table. We're actually bullish on PCU but we want to wait and watch for a dip near $100 or its rising 50-dma, which is where the stock appears to be headed. We are suggesting put positions now with PCU under $110. Our exit target is the $100.50-100.00 range.

Suggested Options:
We are short-term bearish on PCU and we're suggesting the September puts although August puts might work just as well.

BUY PUT SEP 110 PCU-UB open interest= 661 current ask $8.00
BUY PUT SEP 105 PCU-UA open interest= 543 current ask $5.60
BUY PUT SEP 100 PCU-UT open interest=1191 current ask $3.80

Picked on July 29 at $109.04
Change since picked: + 0.00
Earnings Date 08/02/07 (unconfirmed)
Average Daily Volume = 2.0 million
 

New Strangles

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